BUDGET

Budget in front but Pakistan and IMF will discuss taxes next week

Pakistan and the International Monetary Fund (IMF) are working to eliminate their differences over new taxation measures. The government’s willing to increase sales tax rate on fertilizer to 10% and charge 17% tax on import of crude oil to generate Rs115 billion.

Interest income

There is also a proposal to tax interest income under normal tax regime, instead of charging a maximum rate of 15% that is at the lower end.

IMF & Govt Talks

The talks between the both will continue next week. Although only five days left in presentation of the budget for fiscal year 2021-22. According to media reports, if the issues could not be settled down at the level of Finance Minister Shaukat Tarin and IMF’s Mission Chief Ernesto Rigo, then Prime Minister Imran Khan may talk to IMF Managing Director Christalina Georgieva next week. Federal Information Minister Fawad Chaudhry said that “no telephonic conversation was planned today (Saturday)” between Imran Khan and Georgieva.

Difference between IMF & Govt

According to media reports, the key difference between the two sides was the taxation measures. That Pakistan has to take to achieve next fiscal year’s tax target of Rs5.829 trillion. Without additional taxation measures, Pakistan will reach Rs5.3 trillion and the IMF wants that the rest of the difference should be filled with additional revenue measures.

Govt Point

However, the government is of the view that the IMF should leave this to Pakistan. Whether the govt will achieve target through taxation measures or administrative measures.

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